Starting, Owning and Marketing A Restaurant Blog|Starting and Owning a Restaurant - Construction, Planning, Marketing, Opening and Managing a New Restaurant

I returned from my brief trip 2 days ago. While leaving I was advised that the lease was ready to sign from the landlord’s perspective. To bring the blog current as of today (a Sunday), this is what has occurred:

• The lease went to my attorney to do a final review. I explained I was going to drag my feet a little to get all the parties moving before the clock and costs start ticking. We will shoot for an August 1st signing date (almost a month beyond where we wanted to be!).
• The architect was contacted and told we need the drawing drafts as soon as possible.
• The contractor was called to schedule a meeting. He will call Monday or Tuesday.
• My son is doing a major part of the business plan and we touched base on the contents.
• The accountant has formed the LLC and has emailed the formal documents to me along with the Federal I.D. number.

Next week will be an important week to finalize many open issues including:

• Again calling the hood contractors for a quote.
• Getting the final numbers into the business plan.
• Exploring cost options with the contractor for various parts of the build-out and confirming a quick start date.
• Negotiating costs and time frames with the various contractors.
• Confirm amount necessary for lease signing (deposit and first month).
• Opening a checking account at the bank.

Caution again crosses my mind with the economic news, chain restaurant closings and financial results from the whole restaurant industry. I must commit within a couple of days. That is going to be a mental struggle that common sense has to rule after I examine the projections (again). Is the risk versus the reward there?

Five days after we anticipated the lease being approved by the landlord and signed a day or two thereafter, we are still waiting. According to the leasing agent, the lease should be ready this afternoon. However, I will be out of town for three days later this week and have no intentions of signing until I get everyone back moving again.

Remember, when you sign a lease the clock starts ticking. In this case there are no lease payments until the Certificate of Occupancy is issued or 180 days, whichever comes earlier. However, CAM (common area maintenance) charges start immediately. When your lease payments start upon the day of signing, you want to make sure you are ready to begin your work to get open. Each day costs you after you sign.

Here is what has occurred in the last few days:

• We are beginning to work the details of the business plan.
• We have the format for the marketing plan, which will begin prior to opening.
• The ventilation hood contractor has been advised to complete his quote according to the preliminary drawing done by the architect.
• Our accountant is working on the formation of the LLC and securing a Federal ID number. He will then set up our initial records for bookkeeping purposes.

This is the time in a restaurant startup that you feel helpless to make things happen. Until the lease is fully signed out, there is always the possibility that something could go wrong. Your investment is starting to climb, with attorney’s fees, architect fees, accountant fees and your incidental costs.

According to my attorney and the leasing company, the final wording in the lease has been submitted to the landlord. We should be within a day or two of signing. I am in no rush to sign since each day will start the clock running to complete the construction before the lease payments start. The architect is out of town until late today and the contractor has been dragging his feet; there is no rush until everyone is back and working on the permit process.

Yesterday I wrote a letter to the city manager of the small municipality where the restaurant will be located. The letter referred to a previous letter over a year ago when I was inquiring about a moratorium the council had placed on new restaurants. They made an exception to my concept and said they would welcome us in the community. Now I am again letting them know we are ready to sign a lease and hope the welcome is still in place.

It should be noted that part of the goal of my letter to the city manager is marketing. Let people know we are coming. Start the buzz and anticipation. You cannot start marketing too soon. In fact as part of the business plan will be a marketing plan to cover the time before and after we open.

I completed the rough drawing for the architect showing special electrical needs that I know of. While he has the specifications on the equipment, he wants to make sure everything is covered. As example of that rough drawing is here.

I have contacted my accountant (who happens to be an attorney, also) to form an LLC, which is a Limited Liability Company that will be 100% owned by another company I have that includes other family members. This form of ownership suits my purposes for tax and liability issues. Everyone’s situation is different and new entrepreneurs should look at their personal situation with an account to find a business format (proprietorship, corporation, s corporation, partnership, etc.) that meets their needs.

As I mentioned in the previous post, I sent all of the previous correspondence and planning issues to my son to bring him up to speed with the project. I will use him in many ways including management of the new restaurant in the early stages.

Today my tasks include:

• Contact hood contractor to get quote moving
• Contact general contractor for meeting
• Visit location to confirm some measurements
• Work on completing business plan and start marketing plan.

In the previous post I mentioned I wanted to get the project moving. However, timing was against me. I was leaving for the Florida keys, the architect was leaving today for a week. The contractor was to call for a meeting yesterday - he didn’t. The attorney was supposed to get language for the lease to the landlord last Wednesday - he didn’t get it done until Friday. Typical, but each day counts.

The architect needs a rough sketch of locations for special electrical connections to incorporate into his drawings for the permit process. He has the list and location of the equipment from previous sketches, but I need to confirm there are no other locations that haven’t been included for the electrical needs.

The goal today will be to intervene with the attorney and landlord to see exactly where they stand. In addition, the contractor and I must get the meeting scheduled at the location. Some fresh ideas came from my brief stint visiting restaurants while traveling last week and I need to discuss those with the contractor. Of course, one of the subjects will be his failure to contact me yesterday. Previously he was almost an hour late to a meeting. This is not a way to start a relationship. I will not chase him around to do his job!

And as usual, my staff and family all have ideas they want to interject into the project that I have to consider. You will find that starting a restaurant becomes a focal point of conversation from everyone around you. You need to keep the building process from diverting attention from other important tasks with existing operations, family attention (like grand kids) and other business requirements. You are juggling a dozen different tasks and demands. That is part of the challenge!

Today’s to do list for the new restaurant:

• Complete lease document wording
• Do electrical drawing
• Contact contractor for meeting
• Get my son up to speed with the project in order to use him for various tasks
• Get alternative hood builder to give quote
• Contact accountant to start shell corporation for new restaurant, if everything is ok on lease wording

We will see what gets transferred to tomorrow’s list!

By early morning on Tuesday, July 8^th, I hadn’t heard anything on our lease issues. It was a busy day as I prepared to get away for a brief five day vacation in Key West. My concern that we could never meet an estimated opening date of October 1^st had escalated to a certainty.

Since the day was extremely busy trying to take care of other business matters before I left town, I decided to put the deal out of my mind until I got back. As usual, as soon as you make a decision things change.

About 11:30 AM the leasing agent called saying she had been on an extended holiday and was tardy getting back to the landlord and me. She said his answer was yes to all three issues. She wanted to confirm that my attorney would prepare the lease wording for these matters and the other minor issues we had come to terms with the previous week. In essence, we had a verbal meeting of the minds and needed only to reduce the agreement to writing.

At noon I had a lunch meeting, but my real attention was focused on all the parties I had to contact that afternoon to get everyone on track to put the project in the fast lane.

The contacts were made to my attorney, the architect, the contractor and one of the potential hood contractors. I explained how late we were in getting started and everyone needed to help make up the lost time. As usual timing wasn’t good. The contractor was in North Carolina, but was returning the next day (when I was leaving). We scheduled a meeting for Monday July 14^th at the location.

The architect was leaving on the 10^th and wouldn’t be back until the 17^th. The hood contractor was in the middle of a big project in Tampa and my attorney was in court.

More delays. I sent each an email with my concern for the delays and hoped we could make up the time. Not a good way to start the ball rolling!

After about four days, we received a reply from the leasing agent reporting the landlord’s response to our requested changes in the lease. Of the eighteen changes we had requested, we were down to about three major issues.

The first roadblock is a lease the landlord had granted to their anchor restaurant tenant that barred any new restaurants. While they were allowing our operation because they are a dinner only seafood house and we are breakfast and lunch only, there is a problem. If the anchor tenant changes their business model to include lunch, we would be competing with a 250 seat operation of a major chain. We want the right to terminate our lease. The landlord isn’t willing to go along with this; at this point anyway.

The second deal killer is the exterior of the existing structure. It is dirty, needs painting and a few stucco repairs. Essentially, the landlord’s reply is that he is not spending any more money to get us in the space. Of course, we aren’t going to spend more than we have to either.

The third issue is the size of a grease trap. They want a 750 gallon minimum and feel they have the right to dictate this, since they are paying $55,000 of the construction costs. We only want to put in the minimum the code requires.

Our reply to these three items was quick (same day):

1. <!–[if !supportLists]–><!–[endif]–>We cannot sign a lease knowing we are about to spend $250,000 and more to build a business with the possibility that a major corporation could change their business model and put us in a very difficult position. The risk isn’t worth it.
2. <!–[if !supportLists]–>The exterior is the landlord’s responsibility, now and in the future. We are not asking for anything that isn’t already required in the lease. We asked why we would want to spend this kind of money to bring people to a dingy, run-down entrance. We don’t want to start a relationship that is confrontational, but it IS already in the lease!
3. <!–[if !supportLists]–>We can agree to the 750 gallon grease trap IF the landlord is willing to pay for additional costs that may be required due to the size they are demanding if other utilities have to be moved.

The first two issues are real and we cannot move forward without an agreement. The third issue is a negotiating item that we can back off of if necessary; again, to give the landlord some feeling of fairness and control.

The balance of the lease can be modified to meet both parties’ goals.

We will see what happens. We responded on the eve of the 4^th of July. We will not anticipate a response until the next week.